US and Europe

US GDP and Employment

Wednesday June 21, 2017Hugh Dixon

In the year to March 2017, the US economy grew by 1.9 percent. As shown in the figure below this is down slightly on the 2 percent growth seen in December 2016, and below the average growth across the last five years of 2.1 percent.

The US economic growth over the last year has been pushed by household spending growth of 2.8 percent, export growth of 3.1 percent and investment growth of 2.0 percent. The investment growth to the year ended March 2017 has reserved the recent trend of investment declines which had limited GDP growth in 2016.

The US economy growth has helped push the increase in non-farm employment. At May 2017, 146.1 million people were employed in the US. This was an increase of almost 2.3 million on the employment numbers at May 2016. With the rising number of employed people, the unemployment rate has declined to 4.3 percent in May 2017.

At the same time the participation rate has declined to 62.7 percent in May 2017, from 63 percent in March 2017. The declining participation rate may indicate that people are giving up on searching for jobs, have started training to increase their ability to secure a job, or have retired. This decline in the participation rate, along with the increasing number of jobs, has seen the unemployment rate drop to such a level.

The employment growth over the year between May 2016 and May 2017, comes mainly from the increase in service employment with almost 1.9 million new jobs, compared to an increase of 286,000 in good production employment, and 117,000 in Government employment. Within these broad areas the main growth areas are professional services which have added 622,000, health care which is up 329,000, accommodation and food service up 286,000, construction up 191,000, financial services up 165,00, local government up 87,000, and manufacturing up 63,000.